Public policies to enhance regional entrepreneurship: another programme failing to deliver?

Abstract

This paper examines public policies aimed at enhancing entrepreneurship. Drawing upon both theory and prior empirical work, it formulates four tests of policy effectiveness and applies them to evaluate the Wales Entrepreneurship Action Plan (EAP). Apart from some short-lived, limited positive effects, we do not find the EAP reached its business formation targets and made no long-run progress towards Wales becoming more entrepreneurial. By analysing local authority districts in Wales and England, we find that the factors influencing changes in rank mobility in regional entrepreneurship were increases in human capital, in-migration, small firm presence, home ownership and population in the 55–64 age bracket. Importantly, it was regions with initially high wages that saw the greatest rise in entrepreneurship. If ‘more’ entrepreneurship is sought, it is these factors that merit attention rather than the use of public subsidies to directly raise business formation rates.